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Friday, May 5, 2023

The Cipher Brief curates open source information from around the world that impacts national security. Here's a look at today's headlines, broken down by region of the world:  

In the Americas

US Intelligence Chief Warns China, Russia Would Take Advantage of US Debt Default.  U.S. Director of National Intelligence Avril Haines on Thursday warned that U.S. adversaries like China and Russia would take advantage of a U.S. debt default to project the narrative of chaos and dysfunction in the U.S.  Speaking at a Senate panel on worldwide threats, Haines said China and Russia would use information operations during a default to promote the idea that the U.S. is “not capable of functioning as a democracy, and the governance issues associated with it.”  She also said that such an event would cause “global uncertainty” about the value of the U.S. dollar and U.S. leadership, which would cause “volatility” in global markets.  Haines added that there is no evidence that U.S. adversaries are preparing for a default, but there is concern that the U.S. government could default as early as June 1 without action from Congress.  Bloomberg Politico Washington Post

US Intelligence Chief Says Russia ‘Very Unlikely’ to Use Nuclear Weapons.  U.S. Director of National Intelligence Avril Haines said at the same Senate panel that the U.S. intelligence community assesses that Russia is unlikely to use nuclear weapons.  The assessment comes despite months of nuclear saber-rattling from Russia amid the Ukraine war and Moscow’s decision to suspend participation in the New START nuclear arms treaty with the U.S. in February.  U.S. officials have said they do not see evidence that Russia is preparing to deploy nuclear weapons but that they remain vigilant.  Reuters

U.S. Senators Announce Legislation Authorizing Biden to Negotiate Tax Agreement with Taiwan.  A bipartisan group of U.S. senators announced legislation on Thursday which authorizes President Joe Biden to negotiate a tax agreement with Taiwan.  The agreement, which is similar to a tax treaty, would facilitate U.S. investment in Taiwan by protecting against double taxation and tax evasion.  The move to bolster the U.S. business community in Taiwan comes amid mounting concerns over economic disruptions a Chinese invasion of the island would cause.  Reuters 

US State Department Approves Australia Sonar Sale.  The Pentagon said Thursday that the U.S. State Department has approved the potential sale of a sonar system and supporting equipment to Australia.  The proposed sale is worth $207 million and will boost the Australian navy’s ability to counter maritime threats, namely related to enemy submarines.  Reuters US DoD DSC

Canada Considers Expelling Chinese Diplomats for Targeting Lawmaker.  Canadian Foreign Minister Melanie Joly said Canada is considering the expulsion of Chinese diplomats over alleged attempts by China’s intelligence service to intimidate a Canadian lawmaker.  Joly added that her department would summon China’s ambassador to discuss the issue. Chinese Ambassador to Canada Cong Peiwu urged against the expulsions, saying if Canada continues down this “wrong and dangerous path” then Beijing will respond in kind.  The move comes amid reports that Canada’s intelligence service learned of threats against Canadian lawmaker Michael Chong and his Hong Kong relatives by China’s intelligence service.  Reuters Associated Press South China Morning Post

Australian Prime Minister Calls on US to Drop Charges Against Julian AssangeAustralian Prime Minister Anthony Albanese says that ‘enough is enough’ and that the US should drop the charges against Wikileaks founder, and Australian citizen, Julian Assange.  Assange, who is wanted by the US on charges of espionage, has been imprisoned in Britain for four years while he fights extradition to the US.  Prior to his imprisonment he lived for seven years in the Ecuadorian embassy in London.  Albanese’s comments are likely to escalate diplomatic pressure on the US to drop the charges.  Associated Press Al Jazeera  

Analysis — Is Guyana Set to Become the Next Venezuela? Guyana is set to become the world’s fourth largest producer of offshore oil according to new analysis by the Associated Press.  The country would move ahead of Qatar, the US, Mexico and Norway but analysts say an influx of wealth could endanger the country given its fragile political stability and lack of infrastructure and technical training.  Experts worry that Guyana could end up on the same path as Venezuela, a petro-state country that is plagued by political and economic chaos.  Associated Press 

Western Europe

Dutch PM Says Discussions on F-16s for Ukraine Proceeding.  The Netherlands Prime Minister Mark Rutte says that discussions between his country and Ukraine on F16’s are ‘progressing’ but no decision has been made.  The comments came during a press conference following a meeting with Ukrainian President Volodymyr Zelenskyy at The Hague.  Rutte says that discussions are ongoing and include Denmark, Belgium and the UK.  In response to a question by a reporter Rutte said there were “no taboos” on the topic of F16’s.  Reuters 

Belgium Arrests Seven for Allegedly Planning Terrorist Attack.  Belgian authorities arrested seven people on suspicion of planning a terrorist attack.  Belgium’s prosecutor's office said the suspects considered several targets, including NATO buildings, but that they had not finalized any plans.  The prosecutor’s office added almost all suspects are of Chechen origin and three were Belgian nationals who supported Islamic State.  Reuters The Guardian

Italian FM Cancels Paris Visit after French Minister’s 'Insults.'  Italian Foreign Minister Antonio Tajani called off his trip to Paris after French Interior Minister Gerald Darmanin told RMC radio that Italy’s Prime Minister Giorgia Meloni had failed to “solve the migration problem on which she was elected” and accused her of being dishonest. This disagreement reflects escalating tensions between France and Italy due to issues like immigration disputes.  Reuters 

Central and Eastern Europe

Wagner Founder Says His Forces Will Leave Bakhmut on May 10.  Wagner Group Founder Yevgeny Prigozhin says that Wagner units will withdraw from Bakhmut on May 10.  Prigozhin says that a lack of ammunition will result in the senseless deaths of his fighters and that they will withdraw to logistics camps to ‘lick their wounds’.  The announcement on Telegram comes a day after Prigozhin published an expletive-laden video where he directly accused Russia’s military leadership of failing to provide sufficient ammunition.  Standing among a group of corpses that Prigozhin said were Wagner fighters, he directly addressed Russia’s Defense Minister Sergei Shoigu and Chief of General Staff Valery Gerasimov, saying his fighters lacked ammunition and were dying “so you can sit like fat cats in your luxury offices”.  Wagner fighters have played an important role for the Russian military in Bakhmut.  Reuters CNN Washington Post

Former Russian Deputy Defense Minister Joins Wagner Group.  Former Russian deputy defense minister Colonel General Mikhail Mizintsev has joined the Wagner Group according to multiple pro-Russian social media channels.  Mizintsev, who reportedly designed the strategy for the siege of Mariupol earlier in the war, was fired from his post as Deputy Defense Minister for logistics in April, a position he had only held since last September.  His move to Wagner comes amid an escalating public feud between Wagner founder Yevgeny Prigozhin and Russia’s military leadership.  Reuters

US and Ukraine Work to Keep HIMARS Rockets in the Fight Amid Increasing Jamming by Russia.  Russia has been jamming the US High Mobility Artillery Rocket System (HIMARS) in Ukraine more frequently in recent times according to sources who spoke with CNN.  The US and Ukrainians have been forced to develop ‘workarounds’ only to have those solutions defeated again by Russian jamming.  The HIMARS is one of the favored weapons in use by the Ukrainians and was hailed as a ‘game changer’ when it arrived in Ukraine.  The weapons played a key role in Ukraine’s ability to take back territory last year, but has recently been made less effective due to the Russian jamming.  A Pentagon official described the efforts as “constant tweaking” that includes frequent software updates.  CNN

Ukraine Downs Own Drone Over Kyiv.  The Ukrainian military was forced to take down one of its own drones after the unmanned aircraft malfunctioned while flying near Kyiv.  Ukrainian officials initially said the drone was an enemy aircraft, but later admitted that it was Ukrainian and that they had lost control of it.  The video of the incident has been shared widely on social media.  Officials said there were no casualties or injuries from the incident.  BBC Reuters 

Ukraine Confiscates $280 million of Assets from Exiled Billionaire Accused of Supporting Russia.  Ukraine’s domestic security service announced on Thursday that it had seized assets worth more than $280 million dollars belonging to exiled billionaire Vadym Novynskyi.  Ukraine’s Security Service of Ukraine (SBU) accuses Novynskyi of supporting Russia.  Novynskyi’s representatives did not respond to the most recent seizure, but have previously denied that he supports Russia and have described him as a Ukrainian patriot.  Reuters 

Ukraine Testing Israeli-Designed Missile Detection System in Kyiv.  Ukraine is testing a new Israeli-designed air defense system in Kyiv according to Ukraine’s ambassador to Israel.  The system, which could be activated within two months, will allow for more precise alerting and prediction of incoming missile strikes.  Israel, mindful of its need to maintain relations with Moscow, has not released details of the technology.  Israel agreed to the technology share last year despite a decision not to provide Ukraine with weapons.  Reuters 

US Ambassador to Russia Visits Paul Whelan in Russian Prison.  U.S. Ambassador to Russia Lynne Tracy on Thursday visited American citizen Paul Whelan, who is being held in prison in Mordovia in eastern Russia.  The U.S. embassy in Moscow confirmed the visit and reiterated that Paul has been wrongfully detained and that U.S. authorities are working on securing his release as an “absolute priority.”  Whelan was arrested in December 2018 and jailed for 16 years starting in June 2020 on espionage charges.  Axios CNN Reuters 

Poland Introduces Legislation to Increase Security of Undersea Energy Infrastructure.  The Polish government has introduced draft legislation that would allow the military to engage threats to undersea energy infrastructure from hostile ships or aircraft.  The legislation must be approved by parliament to become law and follows a warning by NATO this week of increased Russian maritime activity in the region that could signal a heightened security threat against European energy infrastructure.  Reuters 

Moldova to Close Airspace to Civilian Aircraft for European Leaders Summit on June 1st.  Moldova will close the airspace over the entire country to all civilian aircraft on June 1st, its civil aviation authority announced this week.  The move is designed to enhance security as European leaders arrive to participate in the June 1 European Political Community (EPC) summit.  The EPC summit brings together EU leaders and leaders from 17 other European countries.  Moldova, which neighbors Ukraine, has seen repeated incursions of its airspace by Russian drones and missiles.  The airspace is expected to reopen on June 2. Reuters 

Lithuania Plans Ammunition Purchases Worth $3.4 billion as Part of Military Modernization.   Lithuania has announced plans to purchase up to $3.4 billion in ammunition in the next decade.  The move, announced by the Lithuanian Defense Minister, is part of a larger military modernization effort that will also include upgraded air defense systems, High Mobility Artillery Rocket System (HIMARS) and significant upgrades in armored fighting vehicles.  The defense minister says that increasing Lithuania’s military stockpiles is one of the key priorities in the coming years.  Defense News

8 Killed in Serbia’s Second Mass Shooting in Two Days.  A gunman killed 8 people and wounded 14 in the second mass shooting in two days in Serbia.  Police have reportedly arrested a suspect following an intense manhunt.  Serbian President Aleksandar Vucic called the incident an ‘attack on the whole nation’ and says the suspect wore a t-shirt with a Nazi slogan, though Vucic says they don’t have a motive for the attack at this point.  The latest shooting followed a school shooting the day prior when a 13-year-old boy used his father’s guns to kill eight fellow students and a security guard at a school in Belgrade.   Al Jazeera Associated Press New York Times

Armenia, Azerbaijan Make Headway in Peace Talks, US Says.  U.S. Secretary of State Antony Blinken said Thursday that Azerbaijan and Armenia have made “tangible progress” in talks towards a peace agreement this week in Washington.  The two countries’ foreign ministers attended the talks, which aimed to address tensions over the Nagorno-Karabakh territory.  The latest negotiations reportedly focused on Azerbaijan’s recent installation of a checkpoint on the Lachin Corridor, which is the only route linking Armenia to Karabakh.  Blinken said that an agreement is within sight pending some key issues and that the U.S. will continue to help facilitate the peace process.  Russia has welcomed efforts to resolve the conflict between Azerbaijan and Armenia but has maintained it should be the main force in mediating disputes in the region, saying any peace should be based on the 2020 Russian-brokered truce.  France 24 Reuters RFE/RL

Asia and Oceania

US Intelligence Chief Warns Chinese Invasion of Taiwan Would Halt Semiconductor Production, Cause Major Economic Blow.  U.S. Director of Intelligence Avril Haines on Thursday warned that a Chinese invasion of Taiwan would severely disrupt semiconductor production and cause a major global economic blow.  In what she called a “general estimate” of the disruption, Haines focused on Taiwan Semiconductor Manufacturing Company Ltd (T.S.M.C.), which produces advanced chips in 90 percent of “almost every category of electronic device around the world.”  Haines said a halt in production from T.M.S.C. would cause global economic losses “between $600 billion to $1 trillion on an annual basis for the first few years,” adding that it would significantly impact the economies of both the U.S. and China.  Reuters

Philippines’ Marcos Says Philippine Bases May Be ‘Useful’ in Taiwan Conflict.  Philippine President Ferdinand Marcos Jr. said Thursday that Philippine bases could be “useful” if China invaded Taiwan.  Marcos’ comments came at the end of a visit to Washington in which the U.S. and Philippines agreed to update their defense cooperation agreement, which Marcos said now includes elements to address a potential conflict over Taiwan to ensure “the safety of our Filipino nationals” on the island.  Marcos did not say if the update or separate February agreement to open four more Philippine military bases to U.S. forces would allow the U.S. to place weapons at Philippine bases to deal with a Chinese attack on Taiwan, saying only that such U.S.-Philippine military cooperation is of a “defensive nature” and focused on “disasters and the evacuation of our Filipino nationals.”  Reuters

South Korea to Start ‘Senior-Level’ Engagement With China.  South Korea’s ambassador to the U.S. said on Thursday that Seoul will soon engage in senior level talks with China and work to encourage trilateral cooperation with Japan and China.  The ambassador said Covid-19 has prevented high-level exchanges with China and that the situation has improved enough to resume top-level engagement.  He noted that China has likely had an “unhappy reaction” to South Korea’s recent heightened military and diplomatic engagement with the U.S. and Japan but that Seoul will engage with Beijing and “maintain a good relationship.”  Reuters 

China to Hold Joint Military Exercise in Laos.  China’s defense ministry announced Friday that China will hold a rare joint military exercise with neighboring Laos this month.  Chinese state media said over 200 Chinese troops will participate in the “Friendship Shield 2023” joint exercise, which will focus on attacks on transnational armed criminal groups.  The Laos drill will follow other recent Chinese exercises with Southeast Asian neighbors such as Cambodia and Singapore; the Chinese push to strengthen military and diplomatic ties in the region comes amid U.S. efforts to bolster relations with Southeast Asian partners as well.  Reuters

Analysts Say Chinese Aircraft Carriers Unprepared for Conflict with US.  China continues to highlight its two active aircraft carriers as its military modernization and expansion, but experts say a credible Chinese carrier threat may still be years away.  Military attaches and defense analysts told Reuters that they have doubts about the value Chinese carriers would bring to possible future conflicts, arguing that they are currently more like propaganda pieces.  The experts note that the carriers remain vulnerable to missile and submarine attacks as China has yet to perfect defense measures.  They also say the carriers have limited carrying capacity and that Chinese carrier pilots have reportedly still relied on land-based airfields for missions.  Despite the limits of China’s current carriers, the experts say China still has great ambitions to develop carriers with global range, with near-term tests in the Indian Ocean likely.  Reuters

Northwest Pakistan Shootings Kill Seven.  A shooting at a school in northwestern Pakistan killed at least six people, including four teachers, on Thursday.  The attack at the school, which killed Shi’ite Muslims, may have been motivated by a separate shooting earlier in the day which killed a Sunni Muslim teacher.  The attacks occurred in the Parachir area of Kurram tribal district near the Afghan border, the latest incidents of sectarian violence in the region.  Reuters RFE/RL Al Jazeera 

Islamist Militants Kill Six Pakistani Troops Near Afghan Border.  Islamist militants in the northwestern Pakistani tribal district of North Waziristan killed six Pakistani soldiers on Thursday.  The Pakistani army says three militants were killed in the attack and that operations to secure the area are ongoing.  The Pakistani Taliban, known as Tehreek-e-Taliban Pakistan (T.T.P.) claimed responsibility for the attack, which occurred near the Afghanistan border.  Reuters 

Middle East and Northern Africa

Documents Reveal Israel Seized Binance Crypto Accounts to Foil Islamic State.  Israel has seized around 190 accounts from Binance crypto exchange since 2021, including two allegedly linked to Islamic State and others linked to the Islamist Hamas group, according to documents from Israel’s counter-terror authorities.  The documents did not say how much crypto was seized or detail how relevant accounts were linked to Islamic State, only saying that they were seized to “thwart the activity” of the group and “impair its ability to further its goals.”  Binance said it has been “working closely with international counter-terrorism authorities” amid rising scrutiny of crypto exchanges to better prevent illegal activities.  Reuters 

Arab Leaders to Meet in Cairo to Discuss Syria Rejoining Arab League.  Arab leaders are expected to meet at the Arab League in Cairo for discussions on normalizing ties with Syria according to a spokesman. The move comes amid growing calls by Arab states to restore diplomatic ties with Syria following a bloody and devastating years-long civil war.  Syria’s membership in the Arab League was suspended in 2011 following violent crackdowns on street protests by Syria’s government.  Some Arab states, notably Saudi Arabia and Egypt have recently engaged with Syria.  Reuters 

Sub Saharan Africa

Biden Signs Executive Order to Prepare Sanctions Related to War in Sudan.  US President Joe Biden signed an executive order on Thursday to prepare sanctions related to the war in Sudan.  Biden says the order will “hold individuals responsible for threatening the peace, security, and stability of Sudan; undermining Sudan’s democratic transition; using violence against civilians; or committing serious human rights abuses.”  Biden called the war in Sudan a betrayal of the Sudanese people’s clear demand for democracy.  Associated Press 

Sudanese Children Increasingly Caught in the Crossfire of War in Sudan.  A UN official says the situation in Sudan is “teetering toward catastrophe” and that children are increasingly caught in the crossfire of the intense violence.  Catherine Russell, executive director of the U.N. children's agency UNICEF added that her office has limited ability to provide aid for the children.  Russell says that UNICEF has received reports of 190 children being killed so far, with 1700 wounded.  Reuters Deutsche Welle

Cyber and Tech

Biden AI Executive Actions Precede Tech CEO Meeting at White House. In advance of a White House meeting with CEOs of leading technology firms, the Administration announced several actions related to AI policy.  In a continuation of 2021’s National AI Initiative program, $140 million has been granted to seven new National AI Research Institutes.  Also, an "independent exercise" will take place at Defcon 31, a major hacker event in August.  It will be conducted by leading AI companies, including Anthropic, Google, Microsoft, NVIDIA, and OpenAI.  The exercise will provide public assessments of how generative AI systems are meeting the standards and principles of the administration’s AI Bill of Rights, which was released in October 2022Axios New York Times 

Biden Meets Leading Tech CEOs in White House Meeting on AI Safeguards.   President Joe Biden attended a White House meeting between Administration officials and CEOs of leading technology companies who had gathered to discuss risks and safeguards on Artificial Intelligence (AI).  According to Reuters, a White House official said the President has been “extensively briefed on ChatGPT and (has) experimented with it.”  Vice President Kamala Harris, who chaired the meeting, acknowledged in a statement that AI may improve lives but also introduces “safety, privacy and civil rights concerns.”  She reminded the CEOs of their "legal responsibility" to ensure the safety of their AI products.   In advance of the meeting, Sam Altman, OpenAI CEO, speaking on AI regulation, said that "It's good to try to get ahead of this.  It's definitely going to be a challenge, but it's one I'm sure we can handle."  According to the White House, meeting participants included Google's Sundar Pichai, Microsoft Corp's Satya Nadella, OpenAI's Sam Altman and Anthropic's Dario Amodei, along with Vice President Harris and Biden's Chief of Staff Jeff Zients, National Security Adviser Jake Sullivan, Director of the National Economic Council Lael Brainard and Secretary of Commerce Gina Raimondo.  Reuters Washington Post

FTC Plans New Limitations on Meta Platforms Following Children’s Privacy LapsesThe Federal Trade Commission (FTC), citing allegations that Facebook’s parent company Meta misled parents about controls over children’s communications using the “Messenger Kids” app, has announced plans to prevent Meta from monetizing data of children under 18.  In addition to the proposed ban on profiting from children’s data, Meta would face limits on its use of facial recognition technology alongside other protections for users. The new requirements would apply to all Meta products, including WhatsApp.  Meta spokesperson Andy Stone described the FTC plan as a “political stunt,” adding that FTC Chair Lina Khan has “reached a new low” in harassing U.S. tech firms.  Stone said that Meta will “vigorously fight this action and expect(s) to prevail.”  Washington Post  CyberScoop  Reuters  Wall Street Journal  Bloomberg 

Malaysia Planning Second 5G Network, Will Not Rule Out Huawei RoleMalaysia has decided to proceed with a second 5G system in a move that opens the possibility of a role for China’s Huawei telecommunications equipment manufacturer.  Recently, the U.S. and EU ambassadors to Malaysia warned against Huawei participation, citing “national security risks” to Malaysia’s infrastructure.  Malaysian Digital Minister Fahmi Fadzil announced that the dual 5G development will go forward, with the first part jointly developed by Digital Nasional Berhad (DNB) and the Swedish telecommunications firm, Ericsson.  When questioned about reports that Huawei was lobbying to participate in 5G operations, Fahmi said he was not aware of such talks and said it will be up to the entity developing the second 5G network “to weigh these matters into their calculations and deliberations.”   South China Morning Post 

UK Competition Watchdog Launches Review of AI ‘Foundation Models’.  Britain’s Competition and Markets Authority (CMA) is conducting a review of the AI market with a focus on foundation data models, such as those underlying ChatGPT, and the continuing development of those models.  Sarah Cardell, the CMA’s chief executive, said that the review would assess the types of guardrails and principles that should be developed to ensure “that competition is working effectively [and] consumers are being protected.”  Noting that other UK government branches and regulators are examining areas of AI such as “copyright, privacy, and human rights,” a CMA statement said its review “will focus on the questions the CMA is best placed to address — what are the likely implications of the development of AI foundation models for competition and consumer protection?”  Financial Times  Reuters  TechCrunch  Bloomberg

Ransomware Attack Forces Dallas To Shut Down Courts, Adjust 911 Services.  Key services in Dallas, including 911 systems, have suffered interruptions due to a ransomware attack.  The outages extended to city courts, which closed on Wednesday and Thursday, and affected the Computer Aided Dispatch (CAD) networks used by 911 operators to respond to incident calls.  A City of Dallas statement confirmed that “a number of servers have been compromised with ransomware, impacting several functional areas, including the Dallas Police Department Website.”  Meanwhile, BleepingComputer has determined that the Royal Ransomware operation launched the attack on Dallas.  An offshoot of the now shuttered Conti cybercrime group, Royal has quickly become one of the most active ransomware gangs.  Royal has used vulnerabilities in Internet-facing devices to breach networks, but also employs phishing attacks to gain access to enterprise networks.  BleepingComputer TechCrunch Reuters TheRecord

 Russia Races To Replace Western Technology for LNG ExportsFaced with the task of finding new markets for its natural gas, Bloomberg reports, Russia is desperately seeking technology that will allow it to shift to maritime export alternatives.  In pursuit of a goal to triple LNG exports by 2030, Russia is accelerating development of domestic liquefaction technologies to compensate for those lost when U.S. and French LNG equipment vendors departed after Russia’s invasion of Ukraine.  A push is under way at Russia’s largest private LNG exporter, Novatek PJSC, to bring to full production a fourth liquification unit (also known as a train) at the Yamal facility, Russia’s largest LNG plant.  Novatek was granted a patent in April for its Arctic Cascade Modified gas liquification process.  Three earlier trains at the Yamal facility were built with Western technology. According to a professor at Leiden University in the Netherlands, “Homegrown Arctic LNG technology has become an absolute priority of the Putin administration. It is definitely not yet anywhere close to a viable substitute to Western technology, but [Russia has] an incentive to keep on improving in a wartime economy.”  Bloomberg

Healthcare Networks Hit by Hacks Exposing Data of Millions of CustomersA massive ransomware attack against the systems of NationBenefits, a Florida-based technology company, has resulted in the theft of personal and health information involving millions of people across the U.S.  According to the company, hackers extracted member data by targeting customers using Fortra’s GoAnywhere file transfer software.  Initially estimated to have impacted only thousands of customers in Florida, TechCrunch reports that the U.S. Department of Health data breach portal shows more than three million NationsBenefit members suffered stolen data, “the third largest health data-related breach of 2023.”  A TechCrunch review of records on the dark web leak site operated by the Clop ransomware gang includes customer databases containing members’ names, addresses, phone numbers, dates of birth, gender, marital status and insurance details.  The hackers also launched an attack on Brightline, a therapy provider for children.  The Department of Health breach portal indicates that the attack resulted in data theft involving almost 1 million of the company’s pediatric mental health patients.  TechCrunch BleepingComputer

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